Fully packaged test interface solutions a new growth engine for JF Technology - MIDA | Malaysian Investment Development Authority
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Fully packaged test interface solutions a new growth engine for JF Technology

Fully packaged test interface solutions a new growth engine for JF Technology

01 Dec 2021

JF Technology Bhd, which has been focusing on designing and making high-performance test sockets for integrated circuit (IC) firms, now aims to be a total one-stop shop for test interface solutions for the global semiconductor industry.

JF TestSense, whose principal activities include test engineering services and test interface products, is a new business segment for the group, reveals JF Technology co-founder and managing director Datuk Foong Wei Kuong. He says this business is highly scalable because of its higher total potential average selling price of US$25,000 (about RM105,000) to US$40,000.

“In the first three years, we expect to see high double-digit growth from this division because we are growing from a low base. I believe that three years from now, JF TestSense could contribute about 30% of our group’s revenue,” the 61-year-old tells The Edge in an interview.

JF Technology CEO Dillon Atma Singh concurs.

“We now have about 200 clients in our test sockets business, but we don’t need hundreds of clients for JF TestSense for it to make a significant financial contribution. That’s because JF TestSense is offering one-stop solutions of test interface products,” says the 51-year-old veteran in the semiconductor manufacturing industry, who was appointed to head JF Technology in May last year.

Instead of just selling test sockets, JF Technology can now offer turnkey test engineering services (software) and a full range of test peripherals (hardware), including handler docking plate, probe card, pogo tower, device under test (DUT) board, stiffener, docking mechanism and test docking plate, Dillon points out.

“To the best of our knowledge, we are a very unique one-stop test engineering and test interface solutions provider — not only in Asia but also, maybe, in the rest of the world. Our competitors only cover about one-third or two-thirds of these test peripherals, and none of them is providing total one-stop shop test interface solutions and test programme services,” he observes.

Dillon says that before JF Technology expanded its business to include test engineering solutions, its customers had been sourcing some of the test peripherals from the US, Germany, Sweden and Japan.

“But now, they can come to us and we can provide them with a total solution. Essentially, we are solving an industry problem. Customers no longer have to go to different suppliers. To accelerate the adoption, we will be focusing on our existing customers. We will tell them that we now have a larger product portfolio,” Dillon says, adding that JF Technology is currently in talks with prospective customers from Europe and Asia, as the group seeks to extend its market reach and increase its sales worldwide.

“Obviously, we haven’t been able to travel as much as we wanted to, given the travel restrictions and all that. But now, with borders starting to open, we can’t wait to share with our potential customers about our new products and offerings,” he continues.

In the test engineering business, there is a finite amount of time allocated to test an IC. Dillon explains: “For instance, you might need five seconds to test a particular IC but every second costs money. To make it more cost-effective, you may want to reduce the time to three seconds, so that you could test more ICs using the same tester resources.

“Ultimately, the cost of the test would drop because of productivity improvements and test-time reduction. That’s the value-added services that we are providing to our customers.”

The Edge has heard that JF TestSense already has three clients on board and, as a group, JF Technology will continue to actively promote this new business to its existing and new customers. The maturity of this business is anticipated to come in the next two to three years.

Founded in 1999, JF Technology manufactures and supplies electronic products and components, including test probes and test socket products, to the semiconductor industry worldwide. Its customers include providers of semiconductor assembly, turnkey packaging and test services, as well as IC test handler suppliers.

In layman’s terms, every IC made has to be tested for its functionality and reliability by using tester, test handler, vision and test socket solutions. JF Technology’s products are selected and specified by these clients to test and screen microchips for major companies in the mobile device and automotive industries.

Cooked up in the kitchen

About two weeks ago, JF Technology proposed to transfer its listing status from the ACE Market to the Main Market of Bursa Malaysia, which is expected to be completed in the first quarter of next year.

To Foong, JF Technology has come a long way. He started the company from his kitchen, very unexpectedly, in 1999 amid the dot-com era. Quite astonishingly, although Foong has 40 years of working experience, half of it did not originate from the semiconductor industry.

“I started my career in 1980 in the industrial products business. It was only in the late 1990s that I decided to venture out and establish a business to make electronic product components, because I saw an opportunity during the crisis,” he recalls.

“I started in my kitchen, then my bedroom. I was working from home most of the time. I would start working from early morning to midnight. I went through a lot of challenges because I didn’t start off as a semiconductor guy. The company was burning cash every year … I almost gave up,” Foong reminisces.

In 2003/04, SRM Integration (M) Sdn Bhd was looking for test socket vendors, but nobody could do it. “I looked at the opportunity and [then] told them, ‘Yes, I can do it’, not knowing that the challenges were so big back then.”

But with hard work, Foong managed to overcome these challenges, and in 2005, JF Technology expanded its business to designing and developing IC test sockets for the semiconductor and electronics assembly markets. About three years later, the company was listed on Mesdaq.

The major breakthrough came in 2011, when JF Technology made a foray into the US and went head-to-head with a key competitor from there.

“We [were] embroiled in a patent infringement lawsuit with them. Unfortunately, we lost the case even though we did not infringe on their IP (intellectual property) rights. Anyway, we have moved on from that chapter,” says Foong, who owns about 45% of JF Technology.

On a positive note, he says the incident proved that the global market had taken notice of JF Technology’s products, so much so that its competitor in the US had felt threatened.

“They knew our products were one of the best in the world and they hated to see that. They couldn’t cope with the competition and they wanted to slow us down by suing us in 2014. They attempted to tarnish our reputation,” asserts Foong.

Litigation dragged on for six years, with JF Technology paying dearly for lessons learnt from this experience. “It made us even more resilient and hungry to capture new market opportunities globally. We started talking to Huawei and HiSilicon in 2017. They liked our technology and solutions, and they liked what we were doing. The rest is history.”

Commencing partnership with Huawei

In October last year, JF Technology secured a partnership with Huawei Investment & Holding Co Ltd to set up a plant in Kunshan, in China’s Jiangsu province, to design, develop, manufacture and supply high-performance test contactors.

Foong says operations in Kunshan commenced last month after many months of setting up, including equipment sourcing and installation, followed by the qualification and certification process.

“It is currently in the incubation stage as we are gradually ramping up our production and actively prospecting for new customers in addition to Huawei. We expect the contribution to pick up progressively in the coming quarters,” he predicts.

In Malaysia, JF Technology is also expanding its headquarters and facility in Kota Damansara, Selangor, from the current built-up area of 46,000 sq ft to 96,000 sq ft.

“We are now expanding by an additional 50,000 sq ft, which is just behind our existing site. Construction started in September and is slated for completion in August next year. It will be a nice four-storey building, which will be scalable with another two floors that can be added in the future,” says Dillon.

JF Technology currently employs about 125 people, and the group plans to increase its total headcount to at least 300 people within five to eight years.

“That’s why we are investing about RM25 million to expand our facility. We want to hire more young engineers. We want to nurture and groom local talent who are passionate about test engineering. With the expansion, we can easily more than double our production capacity for test sockets once the new facility runs at full steam,” says Dillon.

M&A a possibility, looking to help local companies go international

Foong indicates that mergers and acquisitions (M&A) may be on the cards. “We have identified potential M&A targets, not just from the test peripheral business but also automated test equipment (ATE). In fact, we have been approached by some ATE players to explore M&A. We do not discount such a possibility, but at this point in time, ATE is not our top priority.”

He acknowledges that as Huawei is a strong partner of JF Technology in China, many companies now want to work with the Malaysian company.

“Our test sockets business is growing steadily. We ventured into China last year and we are now focusing on building the JF TestSense business. We need to manage our manpower resources. In a nutshell, we are not saying no to acquiring an ATE business; we are just saying, please give us some time to look at it later.”

Dillon acknowledges that JF Technology is fortunate to have found a strong local partner — he declined to name the company — in the test peripheral business, which is doing some original equipment manufacturing (OEM) works for the group.

Currently, JF Technology is sourcing its printed circuit boards (PCBs) from countries such as China, South Korea and Vietnam, but the design, final assembly and populating of the boards, as well as the development of test programmes are being performed by the group’s pool of talented engineers.

“We would like to think that this Malaysian company is a hidden gem because they have some very good products and designs. We don’t discount the possibility of exploring a potential M&A with this company, because we hope to take them to the international level,” Dillon says of its partner.

Year to date, shares of JF Technology have gained 13.5% to close at RM1.51 last Wednesday, which translates into a market capitalisation of RM1.4 billion.

Last Tuesday, JF Technology announced that its revenue for the first quarter ended Sept 30, 2021 (1QFY2022) had increased 24% to an all-time high of RM11.31 million, while its net profit grew 26% to a record RM5.03 million, on the back of sustained strong demand from its customers.

Source: The Edge Markets